Kinbauri reaches 2 million oz. gold at El Valle and Carles

Vancouver – The resource estimate at Kinbauri Gold‘s (KNB-V) El Valle and Carles project in northwestern Spain continues to grow from its completed 30,000-metre drilling campaign. All told Kinbauri has topped 2 million oz. gold.

When Kinbauri picked up the past-producing mines in 2007 for US$5 million from Rio Narcea Gold Mines (a company which Lundin Mines (LUN-T) subsequently bought for around $1 billion), Kinbauri pegged the resource there at 2.6 million measured and indicated tonnes grading 5.7 grams gold per tonne and 2.3 million measured and indicated tonnes grading 1.13% copper. The inferred resource was 3.2 million tonnes grading 8.3 grams gold and 1.6 million tonnes grading 0.84% copper.

Kinbauri first increased the size of the resource in January, 2008, growing it to 4.2 million indicated tonnes grading 5.4 grams gold and 4.1 million indicated tonnes grading 1% copper with a further 4.5 million inferred tonnes grading 6.7 grams gold and 0.56% copper.

And now, with new drill results to draw from, Kinbauri has pushed the resource to 6.2 million measured and indicated tonnes grading 4.6 grams gold and 0.85% copper and a further 6.6 million inferred tonnes grading 5.2 grams gold and 0.55% copper.

The latest numbers increase by 26% the contained measured and indicated gold to 916,000 ozs. Contained copper in the same resource categories jumped 30% to 113 million lbs. As for the inferred resource, contained gold increased 5% to 1.1 million ozs. while contained copper increased 48% to 74 million lbs.

On news of the updated resource Kinbauri’s share held even at 36.

Kinbauri president and CEO Vern Rampton says that although a scoping study considering a variety of options to reopen the mines won’t be out until the first two weeks of December, “we’ve already made a decision to go to feasibility.”

When it bought the mines, Kinbauri inherited a sizable amount of infrastructure both a blessing and a curse. The El Valle Mill comes capable of processing 750,000 tonnes a year, but underground workings are proving to be an issue.

Confronting Kinbauri is the onerous length of existing ramps to mineralized areas the company might want to exploit. Even without the addition of more ramps, “It’s already a lengthy trip,” Rampton says. “It’s a grand total of about 6 kilometres from the bottom of the mine.”

What they might do, he says, is use existing ramps to bring in manpower and equipment, but put in a new 300-400 metre shaft and lift dedicated to ore extraction.

“It would save us a lot of money,” he says.

That’s something Rampton wants to do as much of as possible so that, if the mines goes to production, Kinbauri can run a more efficient operation than Rio Narcea did towards its final couple of years at the mines.

Before Lundin took it over, Rio Narcea closed up shop at El Valle and Carles due to increasing mining costs and a desire to offload marginal mines in its roster. Towards the end of its tenure the cost of producing gold rose over US$400 per oz., up from under US$300.

About a year ago Rampton told the The Northern Miner Kinbauri expects to produce gold at a cost between US$300 and US$320 per oz.

“We can do better than (Rio Narcea) because they weren’t completely filling their mill,” Rampton says. Not only that, he says, “and prices weren’t quite right.”

To finance the project Kinbauri is looking at a variety of sources and will consider whatever minimizes dilution.

In the short-term Rampton says the company has enough cash to get passed February. “We feel we’ll be able to top up our kitty soon without diluting too much,” he says.